18 energy suppliers pay £10.4m for contract renewal failures



Eighteen energy suppliers are issuing refunds and redress payments worth £10.4 million after Ofgem found the companies did not adhere to price protection rules.

The energy regulator was notified of the breach of the rules, which protect a customer’s tariff price when they decide to either switch suppliers or tariffs after a price increase, after several of the suppliers self-reported the issue. All suppliers were then requested to self-assess their practices, which revealed that 18 suppliers were not compliant between 2013-2020.

In total, more than one million customers were overcharged over £7.2m.

The customers affected included: 

  • those on a standard variable tariff who switched to another supplier but did not have their variable tariff price protected during the switch,
  • customers on a fixed-term tariff who switched to another supplier but did not have their fixed term tariff protected during the switch, and 
  • customers on a fixed-term tariff who moved to another tariff with their supplier but did not have their fixed-term tariff protected during the switch.

Most of the failures were down to suppliers not having adequate arrangements in place to make sure the protections were applied in full when customers decided to switch.

The suppliers have since agreed to refund all affected customers, and in some cases make goodwill payments, to the tune of £10.4m. Where it has not been possible to process refunds, the suppliers have agreed to make payments to the energy redress fund.

Ofgem said it made clear to suppliers that customers’ tariffs are protected while either switching suppliers or tariffs and they need to ensure their systems, processes and practices are fit for purpose.

The regulator added that it expects all suppliers to ensure that they comply with these requirements and if further non-compliance is identified, Ofgem will be likely to take formal action.

Anna Rossington, interim director of retail at Ofgem, said: “Customers should have confidence in switching and not be overcharged when doing so. This case sends a strong message to all suppliers that Ofgem will intervene where customers are overcharged and ensure that no supplier benefits from non-compliance. 

“It also shows that, where appropriate, Ofgem is prepared to work with suppliers who have failed to comply with the rules, but who are willing to self-report issues and put things right for their customers.”

The suppliers, number of customers affected, and redress payments are as follows:

Supplier

Number of customers affected

 Total Detriment (£) 

 Total Redress Package

Bristol Energy

12,617

£55,982.64

£56,552.64

British Gas/ Centrica

141,415

 £391,176.79

 £1,269,095.47

E (Gas and Electricity)

20,870

 £68,777.23

 £ 72,772.93

E.On

28,126

 £181,668.29

 £238,884.29

EDF

79,083

 £465,441.36

 £ 516,191.55

Engie

9,061

 £12,803.98

 £21,218.74

ESB Energy

1,961

 £35,102.00

 £49,787.00

Green Star Energy

79,083

 £664,661.00

 £808,351.00

npower

2,030

 £24,207.69

£25,602.69 

Octopus Energy

19,712

 £59,902.15

 £121,444.52

Orbit

723

 £5,539.25

 £7,081.12

OVO Energy

240,563

 £2,001,196.45

 £2,801,231.51

PFP Energy

5,347

 £35,204.31

 £50,929.31

Scottish Power

157,236

 £1,449,835.28

 £1,967,465.28

Shell

225,823

 £1,001,203.40

 £1,217,203.40

So Energy

10,514

 £59,723.56

 £ 78,480.89

SSE

132,620

 £713,973.86

 £983,334.45

Utility Warehouse

2,723

 £62,783.92

 £95,512.15

Ofgem has now closed this compliance engagement without taking formal enforcement action, taking into account the suppliers’ cooperation with Ofgem, and the steps they have taken to address their failings. It has published a compliance note with further details.

Tags: Ofgem



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